Fueling Global Warming

Publication - 1 June, 1998
Federal Subsidies To Oil In TheUnited States.

Download document

Executive summary: Despite increasing concerns over climate change and other environmental consequencesof our heavy reliance on oil, the U.S. government continues to subsidize the fuel. Subsidies tooil are provided to producers, transporters, and consumers in varied and often subtle ways. Thesesubsidies not only cost taxpayers billions of dollars per year, but they often exacerbateenvironmental damage. They can also reduce oil prices, suppressing market signals togovernments, oil consumers, and oil producers to begin shifting to alternatives.This study examines federal subsidies to oil in detail, including policies directly targetedto the oil sector and a pro-rated share of more generally-targeted provisions. By highlighting andquantifying this support, we demonstrate that subsidies continue to play a substantial role in theU.S. economy and identify logical areas for reforms that can save taxpayer money, reduceenvironmental damages, and help the country to meet carbon reduction targets. Our analysisincludes a broad array of subsidy areas, including tax breaks, research and development support,subsidized credit programs, defense of oil supplies, below-market sale of public oil resources,subsidized oil transport, and private sector liabilities that are shifted onto the public. We havealso analyzed federal levies on oil and deducted these from our subsidy values as appropriate toobtain our net subsidy estimate. Where available data did not permit specific subsidies to bequantified, we have described them qualitatively.

Num. pages: 140